20-171. Conservatorship; liquidation
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/az/title-20/20-171A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
A. If, after notice, and after hearing, at the conclusion of the sixty day period, it is determined that such insurance company has failed to comply with the lawful requirements of the director or upon consent by an insurance company, the director may appoint a conservator, who shall immediately take charge of such insurance company and all of the property, books, records, and effects thereof, and conduct the business thereof, and take such steps toward the removal of the causes and conditions, which have necessitated such order, as the director may direct.
During the pendency of conservatorship, the conservator shall make such reports to the director from time to time as may be required by the director and shall be empowered to take all necessary measures to preserve, protect, and recover any assets or property of such insurance company, including claims or causes of action belonging to or which may be asserted by such insurance company, and to deal with the same in his own name as conservator, and shall be empowered to file, prosecute, and defend any suit or suits which have been filed or which may thereafter be filed by or against such insurance company which are deemed by the conservator to be necessary to protect all of the interested parties or any property affected thereby.
If at the time of appointment of a conservator or at any time during the pendency of such conservatorship it appears that the interest of the policyholders or certificate holders of such insurance company can best be protected by reinsuring the same, the conservator may, with the approval of or at the direction of the director:
1. Reinsure all or any part of such insurance company's policies or certificates of insurance with some solvent insurance company authorized to transact business in this state, and
2. To the extent that such insurance company in conservatorship is possessed of reserves attributable to such policies or certificates of insurance, the conservator may transfer to the reinsuring company such reserves or any portion thereof as may be required to consummate the reinsurance of such policies, and any such reserves so transferred shall not be deemed a preference of creditors.
B. If the director is satisfied that such insurance company is not in condition to continue business in the interest of its policy or certificate holders, under the conservator as above provided, the director shall give notice to the attorney general who shall thereupon apply to any court in Arizona having jurisdiction thereof for leave to file a suit in the nature of quo warranto to forfeit the certificate of authority of such insurance company or to require it to comply with the law or to satisfy the director as to its solvency, and to satisfy the requirement that its condition is such as to render the continuance of its business not hazardous to the public or to the holders of its policies or certificates of insurance.
It shall be in the discretion of the director to determine whether or not he will operate the insurance company through a conservator, or report it to the attorney general. When all the policies of an insurance company are reinsured or terminated, and all of its affairs concluded, the director shall report the same to the attorney general, who shall take such action as may be necessary to effect the forfeiture or cancellation of the certificate of authority of the insurance company so reinsured and liquidated.
Where the director lends his approval to the merger, consolidation or reinsurance of all the policies of one insurance company with that of another, the same shall be reported to the attorney general who shall proceed to effect the forfeiture or cancellation of the certificate of authority of the insurance company from which the policies were merged, consolidated or reinsured, in the same manner as is provided for the charters of companies totally reinsured or liquidated.
C. The cost incident to the supervisor's and conservator's service shall be fixed and determined by the director and shall be a charge against the assets and funds of the insurance company to be allowed and paid as the director may determine.